MARKETWIRE ALERTS

MARKETWIRE ALERTS 

MarketWire Afternoon News for October 17^th

Updated at 5:00 PM ET 

HEADLINES:

–L.A. CARBOB, Jet Fuel Basis Down on Refinery Issues

— Baker Hughes: North America Rig Count Up by 6 on Week

–Analysis: WTI Flips to Contango 6Mo Out as Oil Glut Looms

— EIA reports 80Bcf Injection into US NatGas Storage Last Wk

–Analysis: EIA Data Shows More Crude Build on Refiner Cuts

NEWS:

L.A. CARBOB, Jet Fuel Basis Down on Refinery Issues

Los Angeles CARBOB and jet fuel differentials weakened on Thursday (10/17), with San Francisco CARBOB also following that downward trend, as refinery disruptions continue following multiple flaring incidents and a recent fire at Chevron’s El Segundo refinery.
Los Angeles CARBOB traded at a 28cts premium to November NYMEX RBOB futures, down 10cts from the last level traded at premium of 38cts on Thursday (10/16).

San Francisco CARBOB also weakened, trading at the end of Friday’s session at plus 48cts and leaving off at 42cts above November RBOB futures, 8cts lower from its last reported level of plus 48cts.

Jet fuel in Los Angeles also softened to a basis of plus 27cts, 8cts weaker from its last assessed level of plus 35cts on Thursday (10/16). 

Traders cited easing to prompt demand and ongoing refinery disruptions that continue to weigh on supply expectations in West Coast markets.
Chevron’s 269,000 bpd El Segundo refinery, has remained under scrutiny following an October 2 explosion that impacted its Isomax unit, which produces jet fuel and other middle distillates. Since the explosion, the South Coast Air Quality Management District has logged multiple emergency flaring events at the site.
The most recent incident, reported October 15, was categorized as emergency flaring with no estimated stop time listed as of Wednesday afternoon. Chevron previously reported another flare on October 12, marking the fourth since August.

MIAMI, FL (DTN) — Los Angeles CARBOB and jet fuel differentials weakened on Thursday (10/17), with San Francisco CARBOB also following that downward trend, as refinery disruptions continue following multiple flaring incidents and a recent fire at Chevron’s El Segundo refinery.

Los Angeles CARBOB traded at a 28cts premium to November NYMEX RBOB futures, down by 10cts from the last level traded at premium of 38cts on Thursday (10/16).

San Francisco CARBOB also weakened, trading at the end of Friday’s session at plus 48cts and leaving off at 42cts above November RBOB futures, lower by 8cts from its last reported level of plus 48cts.

Jet fuel in Los Angeles also softened to a basis of plus 27cts, weaker by 8cts from its last assessed level of plus 35cts on Thursday (10/16).

Traders cited easing to prompt demand and ongoing refinery disruptions that continue to weigh on supply expectations in West Coast markets.

Chevron’s 269,000 bpd El Segundo refinery, has remained under scrutiny following an October 2 explosion that impacted its Isomax unit, which produces jet fuel and other middle distillates. Since the explosion, the South Coast Air Quality Management District has logged multiple emergency flaring events at the site.

The most recent incident, reported October 15, was categorized as emergency flaring with no estimated stop time listed as of Wednesday afternoon. Chevron previously reported another flare on October 12, marking the fourth since August.

Baker Hughes: North America Rig Count Up by 6 on Week

North American drilling activity rose this week, with a total of six rig additions across the U.S. and Canada, according to Baker Hughes data released Friday (10/17).

The total number of rigs operating in the United States rose by one to 548, while staying 37 below from the same week last year.

In the U.S., oil-directed rigs were flat at 418, while gas rigs climbed by one to 121 week-over-week. Miscellaneous rigs were unchanged at nine.

On the North American front, land-based drilling declined by one rig to 528. Offshore activity rose by two to 17, while inland waters were steady at three rigs. The Gulf of Mexico rig count declined by two to reach eight.

Canada’s total rig count rose by five to 198, with oil-directed rigs up by seven to 136 and gas rigs down by two to 61. Despite the increases, total rigs for Canada remained 19 below last year’s levels.

Analysis: WTI Flips to Contango 6Mo Out as Oil Glut Looms

The softening backwardation in West Texas Intermediate futures calendar spreads on NYMEX reflects easing near-term inventory tightness in U.S. crude oil  and future expectations on its oversupply.

The once steep backwardation in the time structure of WTI contracts has been easing since mid-June, with calendar spreads retreating to five-month lows.

On Friday (10/17), the prompt-month contract flipped to a discount to oil for delivery seven months out for the first time since January 2024. The twelve-month spread has similarly fallen into negative territory this week for the first time since May.

WTI’s backwardation has not only been flattening at the front end, but just this week saw a rapid shift into contango much sooner than previous. WTI for May delivery and beyond are now trading at a premium to the prompt month contract. Just last week, the flip into contango was for March 2027 delivery and beyond.

This rapid shift came as the International Energy Agency on Tuesday (10/14) sharply revised higher its oversupply estimates for 2026, now just shy of 4 million bpd.

The revision was based on the pace of recent OPEC production hikes, which the Paris-based energy watchdog is expecting to continue well into 2026, as well as on stronger-than-expected non-OPEC output growth and sluggish demand.

In its latest monthly oil market report, the IEA also highlighted rapidly swelling inventories last month and a surge in volumes of oil on water.

U.S. crude oil production has continued to surprise to the upside despite sliding prices.

In its latest short-term energy outlook, the Energy Information Administration raised its U.S. crude oil production forecast for both 2025 and 2026 to 13.5 million bpd, noting that production reached a record high 13.6 million bpd in July, beating the agency’s previous estimates.

EIA reports 80Bcf Injection into US NatGas Storage Last Wk

Energy Information Administration data released Thursday (10/16) show an 80 billion cubic feet injection into U.S. natural gas storage to 3.721 trillion cubic feet in the week ended October 10.
Natural gas in U.S. storage is 0.7% higher than last year and 4.3% above the five-year average of 3.567 Tcf.
Regionally, EIA reports the East registered a 23 Bcf injection to 883 Bcf, 0.8% less than a year ago and 2.1% higher than the five-year average.
Natural gas in storage in the Midwest increased 30 Bcf week-on-week to 1031 Bcf, a 3% deficit compared to the same week a year ago and 0.1% lower than the five-year average.
Mountain region natural gas in storage increased 4 Bcf, down 2.8% year-on-year to 18.7% above the five-year average.
South Central storage rose 20 Bcf to 1221 Bcf, 5.1% more than in the same week last year and 5.5% above the five-year average.

Analysis: EIA Data Shows More Crude Build on Refiner Cuts

Refiners entering a delayed maintenance season could put more downside pressure in the near term on demand for U.S. crude oil, which has already seen three straight weeks of stockpile builds, data from the Energy Information Administration indicates.

U.S. commercial crude oil inventories grew by 3.5 million bbl to 423.8 million bbl for the week ended October 10, after two prior weekly builds of 3.7 million bpd and 1.8 million bpd, the EIA’s latest supply-demand report on oil revealed Thursday (10/16).

The three-week build puts crude inventories up 0.8% year-on-year and around 4% below the five-year seasonal average.

Crude oil throughput itself –- function of refinery runs — slumped by 1.167 million bpd to a 22-month low 15.13 million bpd for the week ending October 10.

While not unusual for this time of year, the steep and sudden drop was in part a result of refiners just beginning scheduled maintenance after delaying it as much as possible over the past few weeks to take advantage of high refining margins.

In fact, refining operations had outpaced year-ago levels throughout the third quarter, propelled by the highest crack spreads since the first quarter of 2023. That had led to a doubling of refining margins for gasoline and diesel year-on-year, according to EIA’s latest short-term energy outlook.

Consequently, net crude oil inputs have over the past four weeks averaged 16.02 million bpd, some 171,000 bpd, or 1.1%, more than in the same period last year.

But slower runs could put more downside pressure in the near term on refiner demand for crude oil.

On the cumulative daily average, crude oil throughput was up 186,000 bpd, or 1.2%, year-on-year, despite a 166,000-bpd year-on-year decline in operable capacity.

The drop in crude oil runs was most pronounced in the Midwest and on the U.S. Gulf Coast. In PADD 3, net crude oil inputs slumped 552,000 bpd, or 6.3%, week-on-week to their lowest level since February. In PADD 2, they slid 393,000 bpd, or 9.9%, from the prior week.

The inventory build for the week ended October 10 was mitigated somewhat by a 876,000-bpd jump in exports and an identical drop in weekly imports. The Brent-WTI spread has been widening since early July, with WTI in late September trading at its largest discount to Brent since the end of April. U.S. crude exports typically rise in reaction to a widening of the spread with a four-week delay.